
Thus, the Federal Reserve, that imposing edifice of charts and pronouncements, has become the object of such anxious scrutiny. They raise rates to quell the fiery breath of inflation, then lower them again, hoping to coax a smile from the fickle goddess of employment. A delicate dance, to be sure, but one performed by men who seem increasingly… distracted. The S&P 500 (^GSPC +1.22%), puffed up with optimism, trades at a price-to-earnings ratio that would make a provincial governor blush. And the Nasdaq Composite (^IXIC +1.48%), a veritable carnival of speculative excess, is even more outrageously priced, brimming with companies that promise riches tomorrow, while demanding payment today. It’s as if everyone is convinced they’ve discovered a perpetual motion machine, ignoring the inevitable friction of reality.